Tax Mitigation Playbook: Does it make sense to do a 1031 exchange?

Financial Planning Dentist

Below is a simple guide that can help determine if your situation qualifies for a 1031 exchange and if a 1031 exchange seems like the best option for your upcoming real estate transaction. 

Do you, or your entity, pay US taxes? If yes, then you are eligible for a 1031 exchange. 

Is the property you are selling “real property” that has been held for business or investment use? If yes, then the property should qualify for a 1031 exchange. 

Are you planning on reinvesting the full sale proceeds from the sale of your property into another property that will be held for business or investment use? If yes, then you qualify for a 1031 exchange. However, if the answer is no, perhaps you plan to reinvest your proceeds into a second home for yourself, then the transaction would not qualify for a 1031 exchange. 

Do you plan on reinvesting all the proceeds from the sale into a new business or an investment-use property? If yes, or if you plan to reinvest the majority, then a 1031 exchange would be a good fit. If you need or want to keep most of the proceeds rather than reinvest, then a 1031 exchange wouldn’t provide a ton of value. 

Have you already sold your property and received the proceeds? If yes, then you no longer qualify for a 1031 exchange because you already received the gain which is now taxable. 

From the close of the sale on your property, will you be able to identify a potential replacement property within 45 days? If you think you can achieve this, then a 1031 exchange could be a great option for you! 

Is it feasible to sell your property and acquire your new property within a 180-day period? If yes, then a 1031 exchange should be considered. 

Your answers to the basic questions above should give you a good idea of whether a 1031 exchange is a good fit for your situation or not. As always, consult your tax advisors to determine the right strategy. 

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Kevin Taylor

Booking Summer Travel with Kids: Balancing Parenthood and Financial Sanity

As parents, we want nothing more than to see our children’s faces light up with joy as they embark on new adventures. The Taylor Tribe is trying to see family in Illinois and Florida, beaches in California, and some new local campgrounds here in Colorado. If the timing of it all weren’t enough, the budget is always at the front of our minds. The dream of the “perfect” family vacation often lingers in our minds, with images of idyllic beaches, thrilling theme parks, and magical destinations – visions of Clark Griswold come to mind.  However, it’s essential to acknowledge that perfection is subjective and that the true essence of a memorable family trip lies in the quality time spent together, rather than extravagant expenses. Traveling the world and exploring new destinations is an enriching experience that many aspire to. However, the misconception that travel must be expensive often discourages people from fulfilling their wanderlust.  The truth is, with careful planning, resourcefulness, and a dash of creativity, you can embark on memorable adventures without breaking the bank. In this article, we’ll delve into money-saving travel tips that will help you find cheap flights, affordable accommodation options, and unique ways to experience your destination without compromising on the fun. Flexibility is Key: One of the first secrets to unlocking affordable travel is flexibility. Keep an open mind when it comes to travel dates and destinations. This point will be hashed and rehashed through this article – flexibility can be fun, and is always the cornerstone to frugality. Being flexible with your schedule can enable you to take advantage of off-peak seasons, last-minute deals, and discounted fares. Use fare comparison websites or set fare alerts to monitor price fluctuations and snatch up the best deals when they arise. Fly Smart and Save: Finding cheap flights requires a combination of strategy and patience. Consider these tips to save money on airfare: Be open to budget airlines: While they may not offer the same frills as full-service carriers, budget airlines can often provide significantly lower fares. Research different airlines and compare prices to find the best deals. Embrace layovers: Direct flights are convenient but usually more expensive. Opting for flights with layovers can sometimes result in substantial savings. Just make sure the layover time is reasonable and factor it into your overall travel plans. Use flexible airports: If you have multiple airports within a reasonable distance, compare fares for each. Sometimes flying into or out of a nearby airport can make a notable difference in ticket prices. I think travelers may be surprised at the fares they get from some lesser-trafficked Airports. Accommodation without Breaking the Bank: Finding affordable accommodation options is essential for budget travelers. Consider the following suggestions: Embrace alternative accommodations: Instead of expensive hotels, explore alternatives like vacation rentals, hostels, guesthouses, or even homestays. Websites and apps like Airbnb, VRBO, Hostelworld, and Couchsurfing offer a range of options suitable for different budgets. In many of my travels, I prefer the comfort and convenience of Airbnb and VRBO-type situations. The ability to dine in, and in many cases, the space to spread out is appealing. Location matters: Stay in neighborhoods slightly away from tourist hotspots to find more affordable accommodations. This way, you can experience the local culture while enjoying lower prices. Stay longer: Many accommodations offer discounts for extended stays. Consider staying in one place for a longer duration to take advantage of reduced rates. Immersive Experiences on a Budget: Experiencing a destination doesn’t have to drain your wallet. Here’s how to make the most of your adventure while keeping costs in check: Embrace local cuisine: Instead of dining at touristy restaurants, explore local markets, food stalls, and family-run eateries to savor authentic cuisine at a fraction of the price. It’s a delicious way to immerse yourself in the local culture. This might be my favorite – I love finding these “off the beaten path” spots.  Seek out free or low-cost attractions: Research and discover the hidden gems of your destination. Museums with free entry days, public parks, local festivals, and street art tours are often budget-friendly or even free. Opt for walking or public transportation: Exploring a city on foot not only allows you to discover hidden gems but also saves money on transportation. Utilize public transportation systems like buses, trams, or metro networks, which are usually cheaper than taxis or ride-sharing services.  Traveling on a budget doesn’t mean compromising the quality of your adventures. By applying these money-saving travel tips, you can embark on exciting journeys without draining your bank account. Remember, it’s all about being flexible, seeking out affordable flights and accommodations, and immersing yourself in the local culture. With careful planning, you’ll be able to create cherished memories for yourselves and your children.

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Boulder Financial Planning Experts
Kevin Taylor

Why InSight invented the Relationship Balance Sheet

Financial Planning is something that we should all do in order to make sure that we are ready and prepared for the future. The earlier you start, the easier it will be to get there. Along the way, there will be several milestones and headwinds. So in anticipation of those moments, we document the decisions and behaviors we have helped clients change that put their financial plans in better soil. We call that document the Relationship Balance Sheet At InSight, we think it’s important to do two things as part of the financial planning process. First, we think that the efforts our clients are engaged in, like putting the needs of their future before the needs of the present and finding new and creative ways to get ahead of the game in planning. Secondly, we think having a documented record of our progress in our habits and behaviors is a valuable source of support when things get hard and markets get rough.  Knowing that we are doing the controllable parts of financial planning, the process of financial planning, we know that our futures are intact and the plans will unfold the way we anticipate.  Individuals and businesses are always looking for someone they can trust with their finances. As the number of people reaching retirement age rises, the skills required of financial planners need to become more sophisticated. This is why InSight has crafted the “Relationship Balance Sheet”, a method of taking stock of the efforts our clients make and reflecting them back on our clients. Partly as a way of showing clients the less tangible progress they have made in the prior year, and partly as a way of documenting the decades of positive decision-making that got clients to their goals.  We at InSight have yet to find a way to chart the long-term impact of every success we have been able to coach into the habits of our clients, so we developed the Relationship Balance Sheet to enshrine and celebrate

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